The internet infrastructure marketplace has expanded greatly in scope with the advent of cloud computing technologies, creating opportunities for data center operators like ViaWest to address the needs of a much wider range of enterprises. With a western regional focus and data centers in six markets across the five states of Texas, Colorado, Oregon, Utah, and Nevada, ViaWest has found growth through a combination of managed hosting, cloud services, and colocation. With us today to tell us more about ViaWest’s business and plans for the future is CEO, Chairman, and Co-Founder Roy Dimoff.
TR: What customer segment does ViaWest focus on?
RD: Our target market is mid-sized businesses which, application dependent, seek some combination of colocation, managed services and cloud solutions. Our expertise is our ability to address specific applications to be outsourced and determining what set of services would be best matched for a particular application. That really speaks to ViaWest's leverage in the markets that we serve, and our primary focus is on the local markets.
TR: How would you describe the balance between the colocation side and the managed hosting and cloud services side of your business?
RD: As a result of earlier sales and acquisitions, colocation - which we categorize as power and space - represents about 70% of our total revenue. Having said that, we generally see bookings closer to 55% colocation and 45% managed services and cloud. We are seeing a shift in demand that fits well with how we are positioned in the market.
TR: What stage do you think we are at in the cloud revolution? Are we on the cusp of a big ramp yet amongst enterprises generally?
RD: We don't believe so -- we believe the adoption rate for cloud remains somewhat cautionary. There are still significant compliance and security concerns when considering a public or private cloud solution. As with many new technologies, media speculation has a tendency to be ahead of the actual adoption rate. However, the implications and applications regarding outsourcing to a cloud solution is a subject that is being discussed in most board rooms today.
TR: Are there still big changes in the underlying cloud technologies coming in the next year or two? Or are we now at a stage where we are tweaking known technologies to fit particular applications?
RD: Our impression is that we’re in more of a refinement stage. Some businesses are well down the road of incorporating cloud services as a strategy for their outsourcing needs, while some are at the beginning stage. As a technology, there's a lot of stability in what's currently in the infrastructure, however there is still a lot of education required.
TR: ViaWest recently leased new space for a major expansion in Las Vegas. What are your plans there and do you have further expansion plans in the works?
RD: We entered the Las Vegas data center market by way of acquisition in 2008, however we believe that market demand warrants a more substantial investment. This particular initiative will add 110,000 in gross square footage, which will result in about 70,000-75,000 square feet of raised floor space to our footprint. We anticipate opening our new data center in late 2012 and are very excited about it.
We are also anticipating expanding into at least one additional market in 2013, and we continue to invest in our current markets in Oregon, Utah, Texas, and Colorado.
TR: How do you view M&A as a means for your expansion in the data center and managed hosting sector?
RD: ViaWest has been traditionally very active in M&A, having successfully acquired 19 companies since 1999, including two transactions in 2010. We continue to look at a number of potential transactions. This is a capital intensive business, which makes it increasingly difficult for single data center operators to continue to compete and grow which has driven market consolidation.
TR: How has the weak recovery affected ViaWest and the sector as a whole?
RD: In general we're seeing a buying community that is fairly cautious, but that has been the case for a number of years. Since 1999 and two recessions later, we are getting used to it and could not be more pleased with industry growth. A cloud solution addresses certain economic needs and helps mitigate some economic risk to our customers. So despite a cautionary buying community, demand is still strong and we continue to grow.
TR: Thank you for talking with Telecom Ramblings!